9 The government has increased the maturity of the central assurance system.
Given that the Authority has only existed since April 2011, it would be unreasonable to expect the new assurance system to be fully mature yet. However, the steps that have been taken so far have enabled it to progress in the right direction. The mandate for assurance is a necessary starting point to help the Authority secure the coordination and cooperation that is required from departments and HM Treasury. The Authority has used the mandate to obtain information on the nature of the portfolio and the assurance that is needed.
10 The focus on achieving the objectives in the mandate has led to significant successes for the Authority. The improvements made to the assurance system include better quality of government project data, better evidenced assurance reports to support decisions to cease funding failing projects, and the creation of an academy to improve the skills of project leaders. In particular:
• Collecting project information quarterly is improving the visibility of the government major project portfolio. There are 205 projects on the Government Major Project Portfolio, with a combined whole-life cost of £376 billion, and annual cost of £14.6 billion. The information collected includes data on project costs and benefits (both forecast and actual), key milestones and assessments of delivery confidence and risk level.
• Introducing integrated assurance and approvals plans has strengthened the system's link between assurance and approval. Where they exist, integrated assurance and approvals plans force departments to take a more disciplined approach to assurance and increase accountability. HM Treasury requires an assurance report at key stages of a project's life cycle before it decides whether to continue funding the project. The decision to dismantle the National Programme for IT in the NHS was taken after it was reviewed by the Authority in 2010.
• The Authority's reviews are more exacting than those under the previous system. The inclusion of hard evidence in reviews, that examines time, cost and quality issues, better informs HM Treasury approval decisions. Departments told us that the Authority's newest form of assurance, the 'project assurance review', is more likely to investigate detailed project specific issues rather than higher level, generic project delivery points.
• The Authority introduced the Major Projects Leadership Academy to help build the skills of senior project leaders within the civil service to deliver complex projects. Within five years, between 200 and 300 civil servants should have been trained in leadership and project delivery. The Authority aims to routinely move a small number of staff from the academy through its assurance team.
11 For the system to continue to benefit government into the future, it must be built to last. There must be a chain of close cooperation between the different organisations involved in the system. Some organisations are not yet engaging with the system in a consistent way, and useful information is not being shared and used to best effect. In particular:
• Some departments have engaged poorly with the system. Departments' compliance with the requirements of the mandate, such as providing government major project portfolio data and producing integrated assurance and approvals plans, has been of variable quality and completeness.
• HM Treasury has not engaged as strongly as we would have expected at a senior level. There is positive engagement at a working level, but senior sponsorship is important. The senior officials from HM Treasury's Public Spending Group only attended two of the six Authority board meetings between April and December 2011, while a representative of Infrastructure UK, a unit within HM Treasury, attended four out of the six.
• The Authority has not yet developed a formal system to capture, analyse and share insights from individual projects and reviews. Disseminating lessons across the wider portfolio depends on informal contact between the Authority and departments' staff. Without a systematic approach, the Authority could miss cross-cutting trends, lessons and examples of good practice. The Authority intends to develop such an approach shortly.
• Government major project portfolio data is not being used to manage the government's balance sheet. The data allows the Authority to identify issues across the portfolio, for example some individuals in the Ministry of Defence being the senior responsible owners for more than five projects, but more could be done. HM Treasury has a role in managing all the government's assets and liabilities, but in the period between spending reviews Treasury officials do not believe its role is to routinely consider the cross-government portfolio perspective when making investment decisions. Such an approach would enable the Treasury to spot potential problems, address them when they occur and reallocate resources to meet priorities.
• Cabinet Office, HM Treasury and the departments have not yet agreed how to publish project information. Reporting project information publicly provides greater accountability for projects and helps improve outcomes. Regular transparent reporting of performance also encourages engagement with the system by highlighting its successes as well as any instances of non-compliance. However, although discussions are under way, Cabinet Office, HM Treasury and departments have not agreed on the format for public reports, or whether to publish them at all.
12 The Authority does not have sufficient resources to carry out its role in the central assurance system to best effect. The Authority is reporting on 160 more projects as part of the portfolio and carrying out more in-depth assurance work, but has 40 per cent less staff than the body it replaced. These capacity constraints have had significant impacts on the maturity and effectiveness of the new system:
• There are limitations in the number and skills of the staff available for review teams, which have led to difficulties in the timely scheduling of reviews. There is not enough incentive for individuals to become project reviewers or for departments to nominate people for this purpose. Restrictions on using consultants have created additional difficulties in resourcing reviews.
• Most processes in the system are informal, resulting in overdependence on key individuals. Processes for how assurance activity is planned and prioritised, along with those for learning and continuous improvement, are informal. There is a risk that if key staff departed, considerable skills and knowledge would be lost to the assurance system.
• The system does not include continuous assurance. The Authority does not consider that it has the resources to carry out 'continuous assurance' in the highest risk projects, as we recommended in our 2010 report. Continuous assurance involves having assurance reviewers working alongside project teams. The reviewers have an in-depth, up-to-date understanding of issues affecting deliverability and can respond quickly. Some department teams told us that this would be a valuable type of assurance.
13 The future ambitions of the central assurance system are constrained by its capacity. Local government projects and ongoing 'business as usual' spending (programmes that require relatively little initial capital outlay, but with large ongoing revenue implications) do not fall within the scope of the Authority. The Authority does not have the resources to assure these activities. The Authority could determine the optimal scale of its operations by using data on the impact it currently has on project and portfolio outcomes.